Humble Observer - News
Small businesses, citizens feel heat from slow economy
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| Fred Frey, owner of Kingwood Computers, looks over his financial records for the month as he wonders when the economy will turn around. |
By ROYCELYN BASTIAN
In the last presidential debate between Sens. John McCain and Barack Obama, the two sparred heavily over the economy and why their respective plans would be better than their opponent’s. They made several references to “Joe the Plumber,” which referred to small businesses.
But for Fred Frey, owner of Kingwood Computers, the economic problems of the country have hit him harder than he expected. He feels that neither plan will help residents or small businesses.
“The economy is affecting me not favorably at all. We did not expect this; we expected the economy to improve,” he said. “Can either plan help the economy? Not a chance... neither plan has a solution for me and in my opinion for other small businesses.”
The economy has slowed Frey’s business as many of his customers and others are not coming in to get their computers fixed, especially after Hurricane Ike. Unfortunately, Frey is not alone. There are many small businesses and citizens in the community who are struggling due to the current economy.
While economists have different opinions on how the economy is affecting people, they agree it is negatively impacting small businesses.
Kerry Woodson, director of Lone Star College-Kingwood’s Small Business Development Center, said the most significant effect on small businesses is in the area of finance, especially for new businesses.
“Obtaining loans to open a new business has always been a challenge, but it is even more now because banks are tightening their standards for people to get a loan to start their business,” Woodson said.
“Banks and small business loan officers are now looking for an alternative source of income to make sure the business owners will have a way to repay the loan in case the business does not make it. Even with good, solid credit it can be difficult to get a loan.”
The challenge of getting a loan was recently met and conquered by Carla Nash, who plans to open a winery in Montgomery. She expected it would be difficult to secure a loan during this time.
“It was a lot more difficult to get a loan to start the winery even though we have a good financial history,” she said. “It was still a challenge. When the financial crisis hit home, we were truly glad that we were able to get the loan.”
Nash explained that it was a more detailed process and that even though she knew the bankers, they were still taking a harder look at the feasibility of her business being a success.
According to Rebecca Sapp, business services manager for TexasOne Community Credit Union, small businesses are now having to re-evaluate their marketing plan to consolidate their services.
“They are having to look at how to maximize their cash flow and renegotiate the terms of their loan so they can get it at a more affordable rate,” she said.
Sapp went on to say that Houston and surrounding areas are more stable than the rest of the nation, but there is a growing concern of what will happen to small businesses in the local communities. Business leaders are pulling back and waiting to see what will happen, she said.
While the word “recession” has been tossed around, economists are quick to point out the country is not there yet.
“We are technically not in a recession, but by every other possibility, we are experiencing a global recession,” said Dr. Barton Smith, an economics professor at the University of Houston and director of the university’s Institute of Regional Forecasting Department. “Houston has not yet felt the brunt of the economy; that will come next year.”
Smith explained Houston’s global recession will take its toll on the energy market. Recent reports place the price of oil at $67 a barrel, where it was $147 three months ago, he said.
“In the past two and a half years, we have had exceptional growth and we had no job shortage, but next year we can expect virtually no job growth and an increase in home foreclosures,” Smith said.
Warren Matthews, a Kingwood resident and economics professor at LeTourneau University, agrees Texas is doing very well compared to other states. Texas is very fortunate to have a broad economic base, Matthews said.
“We have seen a drop in home prices, a drop in oil prices and by the end of December, the amount of Social Security checks will increase by 5 to 8 percent, which will increase the cost of living,” he said.
The economy has been known to go up and down and currently these are tough economic times, said Ronald Welch, an economist.
“The economy will fluctuate but the solution is the American workers,” Welch said. “The American workers are the most hardworking and smartest workers in the world regardless of the financial or political shape.”
Welch believes whoever the next president of the United States is does not need to touch the economy. When the government gets involved and begins to spend money, it is not good for the economy, he said.
“Sooner or later we will have to pay for it.”
Matthews believes the solution is to support the banks by buying their stocks. The Federal Reserve should continue to pump money into the system so that banks will be able to make loans to companies.
“If banks do not have any money to lend to businesses..., they will not be able to expand their inventory. Businesses depend on short-term borrowing until their products are sold and they are able to pay the banks back,” Matthews said.
Residents sound off
As the focus on the economy has shifted to businesses, especially small businesses, area residents are also being affected.
Richard Michael, 39, of Kingwood, said he was recently laid off from Wachovia Bank. He said the lay-off was directly related to the economy.
“There are no manufacturing jobs anymore, so when they start cutting financial and customer service jobs, too, where are people supposed to go next?” Michael said. “The economic crisis is everywhere. There is no getting away from it.”
Nick Rhoden, 37, of Kingwood, said gas prices are down, but food is still expensive.
“Its been a roller coaster; people don’t know what to expect anymore. One day things are starting to look up, the next day you have to worry about losing your house,” he said.
Michele Witkowski, a self-employer from Atascocita, said the economy fluctuates.
“The economy goes in cycles. With perseverance and saving, it will get better,” Witkowski said. “People need to live within their means.”
“My head is just spinning with all the events in the past few weeks - the economy crashes, banks go out of business, government bailouts - it’s just crazy,” said Sharon Miles, 39, from the Humble area. “Personally, though, I’ve gotten a lot more careful about where and how I spend my money. I’m afraid of whatever might happen next, so I try to save money and prepare for the worst.”
Alex Flores, 32, of Spring said, “I’m a contractor, so right now, I don’t have a lot of problems financially because when Ike came it destroyed a lot of roofs.” Flores, who owns Quality Tile Roof, went on to say, “The month before Ike there wasn’t hardly any work. Not a lot of people could afford to get their roofs done.”
“The economy sucks for everybody, honey,” said Holly Allen, of Navasota, who is a customer service representative for the Continental Airlines luggage department in Spring. “Neither McCain or Obama’s ideas about the economy sound good. They’re all crooks. I’m not holding my breath for either one of them to fix it.”
Porter resident Maury Pentecost said the economy is affecting him the same as others.
“All of this bailout is sickening and I am voting Democrat in this election - a straight ticket,” he said.
John McCain
He has a comprehensive economic plan that will create millions of good American jobs, ensure our nation's energy security, get the government's budget and spending practices in order and bring relief to American consumers.
His policies will increase the value of the dollar and thus reduce the price of oil. In recent years, the declining value of the dollar has added to the cost of imported oil. This will change. Americans will have a stronger economy, a stronger dollar and greater purchasing power for oil, gas and food.
He plans to cut the corporate tax rate from 35 to 25 percent. A lower corporate tax rate is essential to keeping good jobs in the United States. America was once a low-tax business environment, but as our trade partners lowered their rates, America failed to keep pace. American workers deserve the chance to make fine products here and sell them around the globe.
Source: www.johnmccain.com
Barack Obama
He will enact a windfall profits tax on excessive oil company profits to give American families an immediate $1,000 emergency energy rebate to help families pay rising bills. This relief would be a down payment on the Obama-Biden long-term plan to provide middle-class families with at least $1,000 per year in permanent tax relief.
He will restore fairness to the tax code and provide 150 million workers the tax relief they need. Obama and Biden will create a new "Making Work Pay" tax credit of up to $500 per person, or $1,000 per working family. The "Making Work Pay" tax credit will completely eliminate income taxes for 10 million Americans.
He introduced the Patriot Employer Act of 2007 with Sens. Richard Durbin (D-IL) and Sherrod Brown (D-OH) to reward companies that create good jobs with good benefits for American workers. The legislation would provide a tax credit to companies that maintain or increase the number of full-time workers in America relative to those outside the U.S., maintain their corporate headquarters in America if it has ever been in America, pay decent wages, prepare workers for retirement, provide health insurance and support employees who serve in the military.
Source: www.barackobama.com
But for Fred Frey, owner of Kingwood Computers, the economic problems of the country have hit him harder than he expected. He feels that neither plan will help residents or small businesses.
“The economy is affecting me not favorably at all. We did not expect this; we expected the economy to improve,” he said. “Can either plan help the economy? Not a chance... neither plan has a solution for me and in my opinion for other small businesses.”
The economy has slowed Frey’s business as many of his customers and others are not coming in to get their computers fixed, especially after Hurricane Ike. Unfortunately, Frey is not alone. There are many small businesses and citizens in the community who are struggling due to the current economy.
While economists have different opinions on how the economy is affecting people, they agree it is negatively impacting small businesses.
Kerry Woodson, director of Lone Star College-Kingwood’s Small Business Development Center, said the most significant effect on small businesses is in the area of finance, especially for new businesses.
“Obtaining loans to open a new business has always been a challenge, but it is even more now because banks are tightening their standards for people to get a loan to start their business,” Woodson said.
“Banks and small business loan officers are now looking for an alternative source of income to make sure the business owners will have a way to repay the loan in case the business does not make it. Even with good, solid credit it can be difficult to get a loan.”
The challenge of getting a loan was recently met and conquered by Carla Nash, who plans to open a winery in Montgomery. She expected it would be difficult to secure a loan during this time.
“It was a lot more difficult to get a loan to start the winery even though we have a good financial history,” she said. “It was still a challenge. When the financial crisis hit home, we were truly glad that we were able to get the loan.”
Nash explained that it was a more detailed process and that even though she knew the bankers, they were still taking a harder look at the feasibility of her business being a success.
According to Rebecca Sapp, business services manager for TexasOne Community Credit Union, small businesses are now having to re-evaluate their marketing plan to consolidate their services.
“They are having to look at how to maximize their cash flow and renegotiate the terms of their loan so they can get it at a more affordable rate,” she said.
Sapp went on to say that Houston and surrounding areas are more stable than the rest of the nation, but there is a growing concern of what will happen to small businesses in the local communities. Business leaders are pulling back and waiting to see what will happen, she said.
While the word “recession” has been tossed around, economists are quick to point out the country is not there yet.
“We are technically not in a recession, but by every other possibility, we are experiencing a global recession,” said Dr. Barton Smith, an economics professor at the University of Houston and director of the university’s Institute of Regional Forecasting Department. “Houston has not yet felt the brunt of the economy; that will come next year.”
Smith explained Houston’s global recession will take its toll on the energy market. Recent reports place the price of oil at $67 a barrel, where it was $147 three months ago, he said.
“In the past two and a half years, we have had exceptional growth and we had no job shortage, but next year we can expect virtually no job growth and an increase in home foreclosures,” Smith said.
Warren Matthews, a Kingwood resident and economics professor at LeTourneau University, agrees Texas is doing very well compared to other states. Texas is very fortunate to have a broad economic base, Matthews said.
“We have seen a drop in home prices, a drop in oil prices and by the end of December, the amount of Social Security checks will increase by 5 to 8 percent, which will increase the cost of living,” he said.
The economy has been known to go up and down and currently these are tough economic times, said Ronald Welch, an economist.
“The economy will fluctuate but the solution is the American workers,” Welch said. “The American workers are the most hardworking and smartest workers in the world regardless of the financial or political shape.”
Welch believes whoever the next president of the United States is does not need to touch the economy. When the government gets involved and begins to spend money, it is not good for the economy, he said.
“Sooner or later we will have to pay for it.”
Matthews believes the solution is to support the banks by buying their stocks. The Federal Reserve should continue to pump money into the system so that banks will be able to make loans to companies.
“If banks do not have any money to lend to businesses..., they will not be able to expand their inventory. Businesses depend on short-term borrowing until their products are sold and they are able to pay the banks back,” Matthews said.
Residents sound off
As the focus on the economy has shifted to businesses, especially small businesses, area residents are also being affected.
Richard Michael, 39, of Kingwood, said he was recently laid off from Wachovia Bank. He said the lay-off was directly related to the economy.
“There are no manufacturing jobs anymore, so when they start cutting financial and customer service jobs, too, where are people supposed to go next?” Michael said. “The economic crisis is everywhere. There is no getting away from it.”
Nick Rhoden, 37, of Kingwood, said gas prices are down, but food is still expensive.
“Its been a roller coaster; people don’t know what to expect anymore. One day things are starting to look up, the next day you have to worry about losing your house,” he said.
Michele Witkowski, a self-employer from Atascocita, said the economy fluctuates.
“The economy goes in cycles. With perseverance and saving, it will get better,” Witkowski said. “People need to live within their means.”
“My head is just spinning with all the events in the past few weeks - the economy crashes, banks go out of business, government bailouts - it’s just crazy,” said Sharon Miles, 39, from the Humble area. “Personally, though, I’ve gotten a lot more careful about where and how I spend my money. I’m afraid of whatever might happen next, so I try to save money and prepare for the worst.”
Alex Flores, 32, of Spring said, “I’m a contractor, so right now, I don’t have a lot of problems financially because when Ike came it destroyed a lot of roofs.” Flores, who owns Quality Tile Roof, went on to say, “The month before Ike there wasn’t hardly any work. Not a lot of people could afford to get their roofs done.”
“The economy sucks for everybody, honey,” said Holly Allen, of Navasota, who is a customer service representative for the Continental Airlines luggage department in Spring. “Neither McCain or Obama’s ideas about the economy sound good. They’re all crooks. I’m not holding my breath for either one of them to fix it.”
Porter resident Maury Pentecost said the economy is affecting him the same as others.
“All of this bailout is sickening and I am voting Democrat in this election - a straight ticket,” he said.
John McCain
He has a comprehensive economic plan that will create millions of good American jobs, ensure our nation's energy security, get the government's budget and spending practices in order and bring relief to American consumers.
His policies will increase the value of the dollar and thus reduce the price of oil. In recent years, the declining value of the dollar has added to the cost of imported oil. This will change. Americans will have a stronger economy, a stronger dollar and greater purchasing power for oil, gas and food.
He plans to cut the corporate tax rate from 35 to 25 percent. A lower corporate tax rate is essential to keeping good jobs in the United States. America was once a low-tax business environment, but as our trade partners lowered their rates, America failed to keep pace. American workers deserve the chance to make fine products here and sell them around the globe.
Source: www.johnmccain.com
Barack Obama
He will enact a windfall profits tax on excessive oil company profits to give American families an immediate $1,000 emergency energy rebate to help families pay rising bills. This relief would be a down payment on the Obama-Biden long-term plan to provide middle-class families with at least $1,000 per year in permanent tax relief.
He will restore fairness to the tax code and provide 150 million workers the tax relief they need. Obama and Biden will create a new "Making Work Pay" tax credit of up to $500 per person, or $1,000 per working family. The "Making Work Pay" tax credit will completely eliminate income taxes for 10 million Americans.
He introduced the Patriot Employer Act of 2007 with Sens. Richard Durbin (D-IL) and Sherrod Brown (D-OH) to reward companies that create good jobs with good benefits for American workers. The legislation would provide a tax credit to companies that maintain or increase the number of full-time workers in America relative to those outside the U.S., maintain their corporate headquarters in America if it has ever been in America, pay decent wages, prepare workers for retirement, provide health insurance and support employees who serve in the military.
Source: www.barackobama.com
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